In 2025, retailers across the globe made significant strides in their application of artificial intelligence (AI), unveiling a host of new tools and platforms aimed at enhancing both internal operations and customer experiences. This surge in AI-related announcements highlights a growing acknowledgment of the technology’s potential, yet the retail sector still lags behind industries like telecommunications and finance, according to the 2025 AI industry adoption study by the Wharton School at the University of Pennsylvania.
The report pointed to the surprising pace at which other sectors have embraced AI, given the myriad of potential applications for retailers in areas such as customer experience, workforce management, marketing, supply chain, and pricing. However, the complexity of retail operations appears to slow the return on investment compared to other sectors.
Despite this, companies like Amazon are keen to leverage AI for operational efficiency. Retailers such as Target are also adapting to changing consumer behaviors, notably as shoppers increasingly turn to external AI platforms for product research and recommendations. Adobe’s Holiday Shopping report indicated that AI-driven U.S. e-commerce traffic soared by 758% year over year between November 1 and December 1, 2025, with a 670% increase specifically on Cyber Monday.
However, even with these impressive statistics, the actual number of users engaging with AI remains modest relative to the overall traffic in e-commerce. Nikki Baird, vice president of strategy and product at retail technology provider Aptos, remarked, “It’s still a very small base… retailers should be very worried about it because they lose complete control and visibility of everything that … took that consumer to that particular product page.” This concern has prompted several mass retailers with the necessary resources to develop proprietary AI agents while also forming partnerships with external platforms like OpenAI’s ChatGPT.
Walmart was among the retailers making significant generative AI announcements in 2025. The company launched a generative AI assistant named Wally, designed to assist merchants with tasks such as data entry and advanced calculations. Additionally, a consumer-facing AI agent called Sparky was introduced to help customers plan purchases and summarize product reviews. Walmart’s initiative forms part of a broader “super agent” strategy aimed at integrating similar technologies across its business. The company has also partnered with OpenAI to enhance employee training courses on AI.
Target, under incoming CEO Michael Fiddelke, expanded its generative AI strategy by utilizing the technology to accelerate merchandise ideation and streamline third-party marketplace seller applications. Target also rolled out a ChatGPT shopping app within its platform, enabling customers to make multi-item purchases and select fulfillment options. For the holiday season, the retailer introduced an AI-powered gift finder tool on its e-commerce website.
Similarly, Ashley, a furniture retailer, allowed customers to purchase products directly through the AI search platform Perplexity, facilitating product recommendations. Amazon upgraded its seller tool, first introduced in 2024, to include new agentic AI capabilities that monitor inventory, analyze demand, and optimize shipments. For consumers, the company added an “Interests” feature to its app, providing product recommendations based on user prompts.
Levi Strauss & Co. announced a partnership with Microsoft to deploy an agentic AI framework across its operations, with plans for a comprehensive rollout in 2026. E-commerce platform Etsy integrated AI tools for sellers, enhancing product listing capabilities, while Wayfair introduced Muse, a generative AI tool designed to inspire customers with AI-generated images of home interiors.
Other notable implementations included Stitch Fix, which launched a beta style visualization tool called Stitch Fix Vision, and David’s Bridal, which debuted Pearl Planner, an AI tool to assist couples with wedding planning. Luxury retailer Saks Fifth Avenue deployed an AI-powered customer service tool to enhance user interaction, while Best Buy began integrating AI into customer support and marketing efforts.
As retailers increasingly embrace AI, the focus on enhancing customer experiences and operational efficiency is expected to reshape the retail landscape. With consumer preferences evolving and the competitive landscape intensifying, companies that successfully leverage AI technologies will likely gain a significant advantage in the marketplace.
For more information on the developments in AI technology, visit Wharton School, Microsoft, and OpenAI.
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